RBS and NatWest have already started the process of advising credit worthy business customers of how much more the bank could be willing to lend to them. In a trial involving 20,000 SME customers, the banks have already identified the opportunity to offer a further £1.7bn in credit.

The banks will now write to 100,000 SME customers, with that number expected to increase over time.

Chris Sullivan, CEO, Corporate banking, RBS, said: “We bank over a million small and medium businesses and we want them all to realise the borrowing opportunities open to them. RBS and NatWest are pulling out the stops to show businesses how much we can lend to them because we want to increase their confidence levels to invest in future growth."

RBS has a £20bn surplus in UK Corporate deposits that it wants to lend on this and other initiatives.

Credit extensions are agreed on an individual basis and determined by a number of factors such as affordability and repayment history.

RBS has appointed 36 senior regional lending experts across the UK, tasked with identifying credit worthy customers and increasing the provision of loans locally.

More money available for SMEs

The move to identify more potential borrowing business customers follows efforts by the Government to make more money available to SMEs through the Funding for Lending Scheme. The Government is concerned that poor access to finance, particularly for smaller firms, could delay a sustainable economic recovery.

But despite making low cost funding available since August 2012, figures published by the Bank of England in June indicate that net lending to businesses by all 13 banks involved in the scheme had fallen. Paul Fisher, Executive Director for Markets at the Bank of England, attributed the decline to the run down in "non core" lending as banks sell off assets in their legacy portfolios. (See the article RBS increases lending to businesses in Q1)

In 2012 RBS offered more than £58 billion of loans and facilities to UK businesses, of which more than £30 billion was to SMEs. But credit applications to RBS from small and medium businesses fell by 20% last year.

Research by Business Monitor indicates that a lack of confidence in the economy is seen as the main barrier for SMEs, with 11% of businesses feeling discouraged from borrowing.

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